The 26-year-old, who has featured 29 times for the Seasiders this season, was an unused substitute in last weekend's 3-1 loss to league leaders Leicester City.
"Steve Davies is now out for the rest of the season, probably," manager Barry Ferguson is quoted as saying by Sky Sports News. "He's got a groin problem. I don't really know the details but I know he's probably going to go in for an operation."
Ferguson is expected to delve into the loan market this month with Ricardo Fuller now the only Blackpool player capable of playing in the attacking role.